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Terry, “Budget is an estimate of future needs arranged according to an orderly basis covering some or all of the activities of an enterprise for a definite period of time.”According to the Institute of Cost and Works, Accountants, England, “A budget is a financial and/or quantitative statement, prepared prior to a definite of period of time, of the policy to be pursued during that period for the purpose of attaining a given objective.”According to this definition, the essential features of a budget are:1. Essay Contents: Some important definitions of budget are given below: According to George R.
Control used for the execution of budgets is what is called “budgetary control”.
Thus budgeting is concerned with the planning function of management, while “budgetary control” involves the function of controlling in the organisation.
For the proper implementation of the policy and achieving the objectives, here is a need for delegation of authority and responsibility to the executives, based on the blue-print and directions required for execution.
Budgets grow from below but are controlled from above. Bigg, “This is probably the most important budget, as it is usually the most difficult to forecast or attain.”This budget is prepared by the sales manager.
Budget as a Means for Planning, Coordination and Control: Since planning is looking ahead and anticipate difficulties expected and their solution.
Budget plans and forecast the expenditure and performance as regards production, sales, purchases, plant utilisation etc.Production budget is prepared in two parts—one showing the estimates in volume or quantities, and the other showing production costs.It helps in the best utilisation of the business resources available for production, reduction in production costs by eliminating wastage, etc.The sale budget should show the following:(i) Sales estimate for the period;(ii) Area-wise analysis of estimated sales;(iii) The methods of increasing sales if the sales are shown decreased over the past period; and(iv) Cost of additional sales-promotion activities etc.It is based on sales budget, as it has to provide for the output needed to meet the requirement of the sales budget.Budget provides predetermined standard of performance for the guidance of the efforts and activities in the business.As budgets provide standards of performance, they usually become the basis for control.As coordination means weaving together the segments of the organisation so as to operate at the most efficient level and produce maximum profit.This is achieved as all the sections like sales, purchase, production, finance, personal etc.work together to achieve common goals as defined in the budget.Controlling means by systematic appraisal of results to ensure that actual and operations coincide, and remedial actions are taken if there is any deviation.